May 15, 2021

living below you means how do I live below my means


This post may contain affiliate links which means we may receive compensation when you click on links to those products. For an explanation of how we make money, visit this page. This just helps fund the site and is no cost to you. 

How to start living below your means

Living above your means is quite common in today’s world. In fact, A recent study shows that: 

“By December 2020, nearly 9 million people had to borrow more money because of the coronavirus pandemic; the proportion borrowing £1,000 or more also increased from 35% to 45% since June 2020”. 

But just because it’s common doesn’t mean you can’t fix the situation. In this complete guide, I will share tips to help you live within your means without having to become frugal. 

It’s possible to have a lavish lifestyle still and live within your means!


What does living below your means mean?


Living below your means spending less than you bring home every month. It means having clear goals and boundaries of how you spend your time and money.

living above your means what does living below your means mean, infographic showing 2 lots of money minus 4 lots of money first represents income and the second is expenses the result is the definition of living above your means


With all of the temptation that life has to offer, this is easier said than done. But if mastered can help reduce financial stress and put you on your path to financial freedom. 


The first step in defining where you are in living below your means is to see if you have money left over continually at the end of the month. If the answer is yes, then you are probably living below your means.


Suppose you are living paycheck to paycheck or potentially dipping into your overdraft or using your credit card to cover costs. In that case, this is a sign that you need to keep reading this article. 

Signs your living above your means

If you are undecided if you are living above your means, this section will help you. It is easy to get into the habit of living above your means; I have been there.

Use the tell-tell signs in this section to help you start to plan how you will improve your financial situation. 



How do you know your living below your means?



Going into an overdraft every month is typical

If you are constantly dipping into your overdraft each month, this signifies that your spending is not under control. Don’t worry about this perfect fixable if you understand why you are going into your overdraft. 

Start by dissecting your spending habits, print off your last month’s bank statement and have a look at all of your expenses.

Ask yourself:

  • Were there any expenses that you could have avoided?
  • What was essential that you couldn't live without
  • Were there any unplanned expenses that need to be planned for in future? 

You have credit card debt

If you have an existing credit card debt, then this could mean that you have been living beyond your means in the past and are on the road to recovery. 


If you don’t pay this debt off soon, it could hold you back from living below your means, especially if you have a high-interest rate credit card.


If you are only paying the minimum payment, take a look at what the interest rate is.


You will potentially end up paying thousands of dollars or pounds more in interest by only paying the minimum amount. 


If this is true, this is a sign of living beyond your means because you cannot pay more than the minimum payment. 


You’re not saving any money each month

Any finance expert will tell you to save; it’s classic advice. And the main reason for this is that you can cope with the random things that life throws at you. 


If today you are making ends meet but still aren’t saving, then it’s a good time to look at your finances because think about it this way you are one step away from benign in debt if something goes wrong. 


A good rule of thumb to start with is to save at least 10% of your income. Then by the end of the year, you will have more than a months salary saved that can help you in the event of an emergency. 


We call this pot of month an emergency fund, speaking of which… 


You don’t have an emergency fund

An emergency fund does what it says on the tin. It’s a set amount of money, usually 3-6 months worth of income, to help you should disaster strike. 


I think the past two years since the COVID pandemic has struck, and we can all relate to the need for an emergency fund. 

Think of an emergency fund is your opportunity to fight any bad luck that comes your way.


You’re still spending money on expensive things despite not having the savings in place

Life is there to live, I hear you, but if your finances are not in a good place, you sometimes need to take some short-term pain to have a long-term gain or end up if a situation feels out of control.


So if you are taking on more debt despite not having savings or living outside of your salary, then this is a sign that you need to change something. 



How to start living below your means

A journey that is personal to you and your circumstances; remember that. Use the section above to figure out where there are opportunities in your life today to make a change that could be your starting point.

For instance, if you don't have an emergency fund, this could be the place to start.

In this section will find tips and ideas that can help you start living your life but within your means.

You are wondering how do I stop living beyond my means? 

You visited this page for a reason which tells me you already have the desire to lead a different life where you are not worrying about money each month. 

Congratulations, the first stage has the desire; this will help you keep focused and change your money mindset, which is critical. 

In all, it won’t be hard to change your circumstances, dont get me wrong, depending on your debt situation, it could take time, but it is easy to change your path. 

So first things first.

You need a budget

Ok, hear me out with this one. You might think of a budget, meaning you can’t do anything, and it will stop you from living your life. 


What if I told you that you could still live your life, have fun whilst being on a budget? Would you want to know more, right?


So let me share with you a manageable budget that I like to work with called the 50/30/20 budget. This budget allows you to budget for fun whilst still paying off debt/saving.


This budget teaches you to prioritise and get you to spend money on things that matter to you. 


And that is the second step (after realising you need to make a change) to living below your means. 


Find out more: 15 Budgeting Tips that will change your life


Set clear goals


The starting point is that you want to start living within your means. But to keep going, to should consider having a long term plan. 


What sort of lifestyle do you want to live? How much savings in the bank would make you feel comfortable?


It’s essential to be clear to yourself what your want long term to support you staying on track because this won’t be easy at first. 


Tip: Take some time to write down specific long term goals and think of some milestones along the way that would help you know you are on track. 

Prioritise your spending

We have already discussed the importance of having a clear budget. It is vital to go through the spending habits you have today and prioritise what you want to spend your money on. 


Think of your money as time; I use time because you have to give up your time to earn money. How much time did you have to work to pay for some of your expenses today?


Look at any subscriptions that you have set up and get the value of your time for them. 


Ditch the ones you aren’t using. Simple.  


If there are expenses that bring you joy, consider if there is a cheaper way to do it to give you better value for money. 

Use your budget to help guide you

Using a budget mentioned above, like the 50/30/20, allows you to give yourself goals to the maximum costs for your lifestyle. 


Use these as a guide before taking on any financial obligations, and use them to work out what you can afford to spend on additional commitments. It will also guide you which monthly expenses need to be cut. 


In the 50/30/20 example, it looks like this:


Your total take-home income (after tax) divided into three pots:

  • 50% for absolute essentials that you can’t be without, like rent, utilities
  • 30% for wants stuff you could live without like Netflix, meals out, gym.
  • 20% savings and debt repayment
pie chart split into 3 showing 50/30/20 rule budget 50% needs Housing Groceries Utility Bills Transport insurance 30% wants gym shopping 20% savings

So let’s say you wanted to buy a new car and have upgrades. You would allocate the cost for the absolute cheapest car to your essentials (if and only if you need it to get to work), and the extra should be out of your wants budget. 


Using principles like this will allow you to keep yourself in check. The same could be done when looking to move home. For example, you have a maximum of 50% to spend on essentials, so work out bills extra plus rent or mortgage repayments to see if it’s affordable.


Want to learn more?


Checkout how to do 50/30/20 budget template

Consider what parts of your lifestyle could be frugal

A frugal lifestyle has its benefits, one being that you will learn to save money. Now I’m not saying you have to become 100% cheap in all parts of your life. Still, there could be elements of your lifestyle (things that don’t matter so much to you) that you could adopt some frugal parts. 


Here are some ideas:

  • Switch your regular supermarket for Lidl or Aldi (estimated to save hundreds vs a typical supermarket)
  • Shop at a local charity store for clothing
  • Consider downsizing your home if you feel you could save money and live just as well in a smaller space. Benefits to this include less time cleaning and smaller bills. 
  • Sell things you don’t need - have a clear-out and live with less this will teach you the value of living with less.
  • Buy used items from eBay or Gumtree rather than new ones; not only will you save money, but it’s also better for the environment.

Track your spending

Having a budget is taking one step. But to stick to it, you need to have an effortless way to track. 


If you can find an easy way to keep track, your life will be more comfortable, and your new lifestyle will be easier to adopt. 


Why? Because it’s not relying on you having to do lots of things to keep your budget in check. 


Lucky for us that we now live in a modern era, and keeping track of our money has never been easier. Two easy ways could help you are:


Using a modern bank like Starling (UK only)

If you live in the UK, use a bank account like Starling, which will notify you whenever you make a payment on your mobile device. It also separates your spending into different categories to efficiently see how much money you have spent on various activities. 

Starling bank showing you how you can track your spending on the free app


Using Cleo that integrates in to your existing bank (USA, UK and more!)


Cleo is an application that integrates securely into your bank. It uses artificial intelligence to help you budget and automatically put money to one side for you based on what it predicts you can save.

image shows phone with cleo saving/budget app helping you to save money and personal finance


It aims to make finance fun. Think of it as the Alexa or Siri of finance. You can ask it questions like “can I afford to buy this”, and it will help you make buying decisions based on what it knows about your spending habits and overall budget. The best part is that it's free to use!



Consider getting a side hustle

If you have done all the above and still struggling to make ends meet, then getting a side hustle could be the way to generate more income.


A side hustle is a part-time business that you do in your spare time to make extra money. Some side hustle ideas that you could consider are:


  • Renting out a spare room on places like Airbnb
  • Part time remote work by using sites like Flexjobs
  • Sell stuff on Etsy if you have a creative passion
  • Start a e-commerce dropshipping business (start by getting suppliers from Salehoo)
  • Like to walk? Set up your own dog walking business in your local area

Reward yourself

Don’t forget to plan rewards for yourself in moderation; if you constantly go without, you will be more likely to lose focus and give up.


It’s important to reward yourself just in moderation; you have already done the work to figure out what is important to you. If that’s a meal out now and then, make sure you plan it into your overall budget. 

Benefits of living below your means

You will potentially make a significant change in your life if you plan to follow some of the advice in this article. In this section, I want to provide you with some more motivation to what the future holds if you live within your means!

Less stress

A recent study showed that 72 per cent of Americans reported feeling stressed about money at least sometime in the prior month. 

It doesn’t matter where you live in the world money, which causes stress. While you might always have some anxiety about money, you can expect to feel much less stressed by learning to manage it carefully. 

This opens up time to focus on other things and enjoy your life. 

Fulfil your financial goals

Depending on your goals, by understanding how to manage your money, you can begin to work towards your longer-term goals.

This could mean paying your home off early, early retirement or investing. 

Tip: Think about your goals and make a note of them to keep yourself accountable for achieving them!

Better relationships

We all know money can be sore topic in many relationships. By spending time to sort your finances out properly you will take that stress out of your relationship.

Final thoughts on living below your means

Right now, it might seem your finances are out of control. Still, by changing your money mindset and adjusting to your lifestyle, it is possible to change that situation. 

Remember some of the critical points in this guide to help you along the way.


  • Create a budget and goal plan
  • Learn to prioritise your spending based on what’s important to you
  • Track your progress
  • Dont forget to reward yourself

I hope the information in this guide helps you achieve your goals. Let me know in the comments below if you have any other questions or tips!

About the author 

Mary Elizabeth

Founder of MeMoreMoney. A self-taught finance nerd, learning by doing and experiencing. Bought first house at 21, paid off student debt, and save 100k by 30. Featured Personal Finance Expert in GO Banking Rates and Yahoo! Finance

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

Join the  exclusive MeMoreMoney club

Be among the few in the know and join the MeMoreMoney club today

>